A Green Peak Oil Company Expanding in North America: Stagecoach Group

If you buy in advance, flying is still reasonably priced, but
increased security and wait times mean that it’s quicker to
drive for shorter trips.

With current high gas prices, driving is increasingly
expensive.

Except on a few routes, Amtrak is
slow, has very limited service, and costs a bundle.

In our new peak oil world of $4 gas and, more and more people are
opting for bus travel. The young like it: My
girlfriend’s daughter travels by bus almost exclusively,
even though she owns a car. None of the problems above are
likely to get any better. Airline and gas prices will go up with
oil prices. TSA procedures are ever more invasive.
Amtrak needs fundamental reform and rail lines that are
separate from freight to deliver better service.

Hence the Bus.

Cost and travel time,
booked a month ahead,
NYC to Albany

Booking

Travel time

Cost

Amtrak

2:45

$40

Airlines

1:12 plus 2hr for security

$99

Drive

2:50 (Google maps)

$25 for gas

Megabus

2:45

$8

Which is why Stagecoach
Group‘s (LSE:SGC)
Megabus division has been driving rapid profit growth in North
America. For passengers, the price is right (see table), and
the buses have amenities like free Wi-Fi.

Now Stagecoach Group is buying part of struggling Coach America‘s
business in order to accelerate Megabus’s expansion in Texas and
California with ready-built depot infrastructure.

Megabus.com revenues,
Stagecoach 2011 Annual report

Green Profit From Peak Oil

Investors should take note. Megabus can achieve
these low fares because they use much less fuel per passenger
than flying or driving. Those fuel cost savings will only
grow as oil prices rise.

As a green, I’m not willing to invest in oil companies in order
to profit from the rising oil prices.

Many people say the solution is Electric Vehicles (EVs).
But expensive batteries leave Nissan’s (OTC:NSANY) Leaf
and Tesla’s (NASD:TSLA)
Model S in an expensive niche despite extensive government
subsidies.

Alternative transportation companies such as Stagecoach (LSE:SGC),
bus manufacturer New
Flyer Industries (TSX:NFI),
and bicycle maker Accell Group
(AMS:ACCEL)
are already mass market. They seem at least as
likely to drive (and pedal) off with the profits from Peak Oil
than makers of electric vehicles.

Stock Valuation

Alternative transport stock valuations are good, too. At a
price of 236 pence, Stagecoach paid a 3.1% dividend last year, and
has raised its dividend for the last four. The P/E ratio
(based on 2011 earnings) is 9.9. That’s a pretty good
valuation for a growing company which will gain from rising oil
prices, and is likely to do well from budget tightening in an
economic downturn.

In contrast, luxury car company Tesla will probably be hurt if
the economy falters, has no prospect of paying a dividend, and
lost almost $300 million ($2.87 per share) last year.

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indicator of future results. This article contains the
current opinions of the author and such opinions are subject to
change without notice. This article has been distributed for
informational purposes only. Forecasts, estimates, and certain
information contained herein should not be considered as
investment advice or a recommendation of any particular security,
strategy or investment product. Information contained herein
has been obtained from sources believed to be reliable, but not
guaranteed.